HMRC strops its chopper, eyes £235m IT slash plan

Plans to collect more taxes, cut own costs as it does so

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HM Revenue and Customs is aiming to save £235m from changes to IT services as part of plans to cut its running costs by some 25 per cent over the next four years, says a report by the National Audit Office.

The document, "Reducing Costs in HM Revenue and Customs", says the department's annual running costs in 2010-11 were £3.6bn, and it has a target to reduce these by £1.6bn over the four years to 2014-15. In addition, it has to generate £7bn in additional tax revenues over the same period from re-investing £917m.

According to the findings, HMRC had a good understanding of spending on a number of areas, including IT, and its corporate services section had good unit cost information, for example on IT.

But the department had only limited information on the costs of its end-to-end processes and its servicing of different customer groups, and on the links between costs and value. This restricted its ability to assess long-term efficiency gains.

Amyas Morse, head of the National Audit Office, said: "Reducing running costs by £1.6bn over four years is a big challenge for HMRC.

"It is making progress, but there is no contingency in its plans. To achieve value for money, it needs to better define the service it is aiming for, improve its understanding of costs and develop its implementation plan."

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